ACN 120 394 194

Level 22, 1 Market Street

Sydney NSW 2000
Phone: (02) 8263 6601
Mobile: 0419 746 618
www.ilh.com.au

31 July 2013

The Manager
Company Announcements Office
Australian Stock Exchange Limited

ACQUISITION OF CAPRICORN INVESTMENT PARTNERS AND PENTAD

Expansion into Corporate Advisory and Wealth Management
Highly complementary and synergistic with existing legal businesses
Supports scale, provides earnings diversification, and underpins earnings consistency
The Directors of ILH Group Limited (ILH or the Company) are pleased to advise an agreement
to acquire Capricorn Investment Partners Limited (CIPL), and the business and assets of The
Pentad Group (Pentad), subject to approval of the issue of shares at an Extraordinary General
Meeting (EGM) of shareholders.
CIPL is an unlisted public company with operations in Queensland, NSW and Victoria. The business
consists of two divisions: Corporate Advisory in Professional Services; and Wealth Management.
Refer to Annexure A: About CIPL and Pentad for background.
In acquiring CIPL, ILH will also acquire the business of large Melbourne based boutique Financial
Planning firm Pentad.
Pentad will be integrated with CIPL and provide scale to CIPLs Wealth Management operations.
Significant synergies are expected between CIPL and Pentad as part of the transaction.
The Directors believe that CIPL and Pentad (hereafter collectively referred to as CIPL unless
specified otherwise) are high quality businesses with strong growth prospects. CIPL will have
annual revenues of more than $5.8m and provide ILH with an additional platform for further
growth and development, and access to new industries and clients in the Australasian market.
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The Directors consider the acquisition offers significant opportunities for client cross pollination
and synergies generally with ILH member firms (refer to Annexure B: Corporate Structure).
The transaction supports ILHs strategy to grow a limited number of high quality member firms,
with strong, focused market positions and long term client relationships, into significant and highly
profitable businesses.
The proposed acquisition is consistent with the Boards objectives of: increasing revenues,
profitability and market capitalisation; diversifying earnings; and achieving more consistent
earnings growth and cash flows.
In addition to the continued expansion of the legal business, ILH will develop a complementary
business strategy through the acquisition of complementary non-legal businesses with the
following characteristics:

Strong businesses with significant growth potential

Recurring revenues
Non-personal exertion revenues
Scalable
Synergistic with the legal businesses opportunities to cross pollinate.

ILH has strong future growth prospects and the CIPL acquisition is a further important step in the
implementation of the Companys strategic plan. Refer to Annexure C: About ILH for background.
ILH considers the CIPL transaction will significantly progress its enhanced strategic objectives.
Further, Corporate Advisory is expected to provide referrals to the Commercial arm of ILHs legal
business, and Wealth Management is synergistic with the Private Client legal business as well as
Law Central.
ILH Strategy

Acquire legal and other professional services businesses

- Growth (organic and acquisition)
- Improved business performance
- Group revenue and cost synergies through collaboration (working together for cross pollination)

Develop a network of member firms, affiliates and strategic relationships in Australia, the Pacific region, South
East Asia and internationally

Multiple Divisions
- Legal Services
- Law Central
- Corporate Advisory
- Wealth Management

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Transaction Details
ILH proposes to acquire 100% of the shares in CIPL, and the business and assets of Pentad, for an
initial consideration of $9.25m. The initial consideration will be satisfied by the proposed issue of
52.7m ILH shares at 9.0 cents per share and the payment of $4.51m cash. In addition, deferred
consideration of up to $5.0m is payable over a two year period in scrip and cash if certain
performance conditions are satisfied.
The initial cash component will be sourced from ILHs existing cash reserves and borrowing
capacity.
The initial shares component will be fully paid ordinary shares in the Company and will rank
equally with the Company's current issued shares, except for any final dividend payable in respect
of the 2012/13 financial year, where the shares will not participate.
The transaction is subject to shareholder approval for the issue of shares to the CIPL and Pentad
vendors pursuant to ASX Listing Rule 7.1.
There are 50 vendor shareholders in CIPL and 6 vendor shareholders in Pentad. The vendors are
not associates or related parties of each other. Accordingly, control in ILH will not pass to any one
shareholder as part of the transaction. It is estimated that the largest vendor shareholder will own
approximately 8% of ILH following the acquisition.
Voluntary escrow arrangements will apply to a portion of the shares to be issued.
ILH appointed independent accounting firm Crowe Howarth to undertake financial due diligence
and ILH legal firm Rockwell Olivier to provide legal due diligence in respect of the acquisition. TC
Corporate has provided corporate and financial advice to ILH.
Although not required by the Corporations Act, ILH has appointed DMR Corporate to provide an
Independent Experts Report (IER) in respect of the transaction.
The IER has determined that the transaction is fair and reasonable to ILH shareholders.
A copy of the IER will be included with the Explanatory Statement accompanying the Notice of
Extraordinary General Meeting to be sent to shareholders.
The acquisition is structured with the usual ILH employment restraints and conditions, consistent
with the Companys disciplined acquisition model and strict criteria.
It is intended that ILH will appoint CIPL senior executive Dr Stephen Moss to its Board if the
acquisition is approved.
Given the specific regulatory and compliance obligations under the AFSL, ILHs Managing Director
and CEO Graeme Fowler, and Independent Non-Executive Director Anne Tregonning, will be
appointed to the subsidiary Board of CIPL. Both have relevant experience in the financial services
industry.

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Extraordinary General Meeting of Shareholders

The Extraordinary General Meeting will be held on 2 September 2013.
Provided the issue of shares is approved by shareholders, completion of the transaction is planned
to be effective 1 September 2013.

31 July 2013
Graeme Fowler
Managing Director
ILH Group Limited
Mobile: 0419 746 618

David French
Managing Director
Capricorn Investment Partners Limited
Mobile: 0412 534 637

Dr Stephen Moss
Executive Corporate Advisory
Capricorn Investment Partners Limited
Mobile: 0413 746 623

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Annexure A About CIPL and Pentad

CIPL is an unlisted public company with operations in Queensland, NSW and Victoria. It consists of
two divisions:

Corporate Advisory in Professional Services

Wealth Management (including Pentad).

Annual revenue is expected to be over $5.8m.

Corporate Advisory
The Corporate Advisory business has offices in Sydney, London and Singapore and is headed by Dr
Stephen Moss, a former partner of PWC with a background in law and psychology. Stephen Moss
joined CIPL in 2012, when CIPL acquired his Eaton Capital Partners consulting and advisory
practice.
Corporate Advisory clients include large and medium size Australian and international professional
services businesses including legal, engineering, accounting and financial services firms,
environmental services businesses and the overseas development assistance sector.
This division provides advice in mergers and acquisitions, governance, business strategy and
capital raisings.
The Corporate Advisory business is positioned to take advantage of the fast growing international
professional services sector, which is largely fragmented and offers consulting opportunities in
strategic development and consolidation.
Wealth Management
CIPL has an Australian Financial Services Licence (AFSL) which enables the provision of a range of
Wealth Management and ancillary services.
The Wealth Management division was founded in 2001 by David French, a former UBS industry
analyst, economist and financial services specialist, and is based in Rockhampton, Queensland.
Pentad
In acquiring CIPL, ILH will also acquire the financial planning business of Pentad. This business was
developed by Lance Livermore, Russell Warmington and Chris Heyworth, each of whom possesses
extensive experience in financial planning and the wealth management industry.
Pentad and CIPL Wealth Management clients include senior executives and professionals, business
owners and high net worth individuals in the fast growing retirees sector.
Pentad has a shared commitment to the ILH and CIPL vision.
Both CIPL and Pentad are FoFA ready (Future of Financial Advice Reforms) financial planning
businesses. The combined Wealth Management division will provide an extensive range of
financial services including the following:
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Financial Planning
The business provides fee for service advice in relation to retirement and pre-retirement planning,
superannuation, investments, self-managed superannuation, wealth protection and personal risk
advice, share trading services and estate planning.
The business will have 11 in-house financial advisers in Rockhampton and Melbourne.
Additionally, in 2012 CIPL commenced a dealer group service providing proper authorities to
external Authorised Representatives operating under the CIPL licence. There are currently six
external representatives in Brisbane, Sydney and Melbourne.
The following table shows consistent growth in funds under advice.

CIPL
Pentad
Total

30 June 2013
$m
117
330
447

2012
$m
99
320
419

2011
$m
90
320
410

2010
$m
78
295
373

Proprietary Administration Platform

The business operates a proprietary administration platform providing the opportunity for
enhanced business margin, and enabling efficient management of client portfolios under managed
discretionary account arrangements.
Funds Management
CIPL operates the Capricorn Diversified Investment Fund, which provides financial planning clients
exposure to a range of assets.
Dealer Group Services
In addition to providing services to external Authorised Representatives, CIPL acts as a responsible
entity for other external managed funds.
Key Metrics of CIPL
Measure
Revenue (forecast)
*Includes
Corporate Advisory
Wealth Management (recurring revenue)

EBITA (forecast)
Funds Under Advice
In-house Financial Advisers
External Authorised Representatives
Total Employees
Managed Fund - Assets under Management

FY13
$5.8m*
$2.0m
$3.4m

$1.2m
$447m
11
6
28
$7.1m

The integration of CIPL and Pentad, and the combination with ILH, are expected to realise
significant revenue and expense synergies into FY14.
CIPL will operate as a stand-alone business within ILH and will maintain separate branding.
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Annexure B Corporate Structure

ILH GROUP LIMITED

LEGAL SERVICES

Melbourne / Perth / Sydney

Civic Legal

Corporate Advisory

Wealth Management

Signet Lawyers

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Annexure C About ILH

ILH became a publicly listed company in August 2007 and was established as a vehicle under which
various professional services firms and related businesses could operate independently but service
a national network of clients.
At the time of listing, ILH consisted of three Perth based businesses - Talbot Olivier, Brett Davies
Lawyers and Law Central.
Talbot Olivier and Brett Davies Lawyers were both Perth based law firms, and Law Central is a
complementary online business that provides access to standard legal documentation through an
online platform.
At the time of listing, ILH had annual revenues of approximately $10m.
ILHs strategy since listing was to grow both by acquisition and organically.
ILH has acquired the following businesses and as a result developed a national footprint and a
unique position in the Pacific Region:

Argyle Partners November 2008 (Sydney)

Signet Lawyers March 2009 (Sydney)
Civic Legal February 2011 (Perth)
The Pacific Legal Network July 2011 (Sydney and Pacific Region)
Rockwell Bates (49%) July 2012 (Melbourne).

In May 2013, the law firms of Talbot Olivier, Argyle Lawyers and Rockwell Bates combined to
become the national law firm Rockwell Olivier.
ILH continues to be an active buyer of businesses in the professional services market and is
continually assessing opportunities for firms to join its network.
Today, ILH has revenues in excess of $30m and more than 800 shareholders, with the majority of
major shareholders being vendors from acquired businesses or ILH management.

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